International Journal of Commerce and Management Research

Authors
Rais Ahmad Khan, Dr. K Govindarajan

Abstract
Airline service decisions are increasingly influenced by the new drivers of profitability. The fluctuating profitability must be better understood by the firm to make a better strategy. The Primary objective of a business undertaking is to earn profits. Profit earning is considered essential for the survival of the business. Profitability analysis measures how will a firm is performing in terms of its ability to generate profits. Profitability of the firm is highly influenced by internal and external variables, i.e., size of organizations, liquidity management, growth of organizations, component of costs and inflation rate. In this paper an attempt has been made to measure the profitability performance on the basis of selected profitability ratios. The present study is based on secondary data of last 6 years and covers the profitability performance of Air India. Air India experienced a strong 30-35% year-on-year improvement in revenue during the study period. Also Air India’s domestic market share declined from 17.1% to 16.5%. During past five years Indian airline industry had witnessed major downturn on account of global economic crisis, lower passenger count, rising fuel prices, fluctuations in foreign exchange rate, all these external environmental factors along with internal environmental factors like operational inefficiency, non- strategic management decisions, higher overheads & financial charges influenced NPM negatively & resulted in greater losses.